Euro Lower but Tensions Seem to be Easing

The EUR USD sold off hard overnight as traders reacted tothe news that Spain’sgovernment had takeover a struggling financial institution. This actiontriggered fear that sovereign debt problems were spreading across Europe.

The EUR USD sold off hard overnight as traders reacted tothe news that Spain’sgovernment had takeover a struggling financial institution. This actiontriggered fear that sovereign debt problems were spreading across Europe. Shortly after the U.S. opening, the Euro began tostabilize after testing a daily chart .618 retracement level at 1.2345.Regaining the 50% level at 1.2407 will put the Euro in a strong position torally into the close.

The GBP USD is trading a little lower after confirming a newtwo-day main bottom at 1.4229. Based on the new range formation, look for thestart of a possible rally to 1.4810 over the near-term. The announcement thismorning of new budget cuts is being received as a positive for the BritishPound because it is a sign that the new government is willing to work swiftlyto help shore up the U.K. economy.

After earlier weakness, the USD JPY is beginning to strengthen.Earlier in the session, investors were selling the Dollar/Yen in anticipationof a flight-to-safety rally. The recovery rally in the U.S. stock market has helped easedemand for lower yielding assets.

Stronger gold prices and a recovery in the U.S. equitymarkets are helping to pressure the USD CAD at the mid-session. On Friday, the Dollar/CADfound solid resistance at an old top at 1.0738. The new range formationindicates that this currency is poised to retrace back to 1.0430.

The Australian Dollar is trading lower but is currently in aposition to confirm Friday’s closing price reversal bottom with a rally through.8365. A trade through this price will put the AUD USD on pace to test a 50%level at .8728. With the trend still down, this type of formation usually leadsto a 2 to 3 day rally. This indicates that excessive volatility is likely tohit the Aussie over the next few days. .

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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